Senior industry stakeholders have called for a reassessment of who pays towards the government’s free retirement guidance service, in light of expansions proposed over the past few months.
Steven Cameron, regulatory strategy director at Aegon UK, said when Pension Wise was set up it had a clear and worthy purpose: to offer free impartial guidance to those aged 55 and above.
Since then, he said Pension Wise’s remit has been expanded to those aged 50 plus.
In December, HM Treasury announced Pension Wise would also offer guidance to those who are considering selling their annuity on the secondary market.
Then, earlier this month, the government published its response to the pension transfer and early exit charges consultation, noting that Pension Wise will develop “new content on the transfer process”.
Mr Cameron said while these extensions may benefit some individuals, it also begged the question of who should pay for the service.
He said: “We hope the Financial Advice Market Review will create opportunities for cost-effective models between ‘no’ and ‘full’ advice. This would be the time to re-evaluate where public guidance services such as Pension Wise should be targeted.”
The Association of Professional Financial Advisers’ director general Chris Hannant, said the FCA should look at the issue of funding Pension Wise. “My understanding is they are doing so at the present,” Mr Hannant added.
When FTAdviser asked the FCA and Treasury for more information, both stated that it was up to the other Pension Wise partner to comment on funding the guidance provider.
In January 2015, the Treasury revealed that advisers would pay £4.2m towards the pension freedoms ‘guidance guarantee’ levy, with the overall initial industry levy for 2015/16 set at £35m.
Tom McPhail, head of retirement policy at Hargreaves Lansdown, said: “All aspects of Pension Wise, including its levies, should remain under ongoing review until some semblance of stability has been restored to the pension system.”